The boss of Burger King UK said today that the fast food chain is still profitable and sees a “significant” opportunity for growth as he acknowledged the need for future investment to correct some of the “missteps” that have held it back in recent years.
Alasdair Murdoch, who formerly ran Gourmet Burger Kitchen and before that held senior operational roles at Pizza Hut and KFC, is part of a star-studded industry team that gained the rights to the brand in the UK last year and plans to open dozens of new sites.
It will launch up to 25 new units this year, and between 30 and 50 a year over the next few years, as part of an effort to regain scale having dropped from a peak of 700 stores to 500 now.
Backed by private equity firm Bridgepoint, Mr Murdoch’s management team includes CDG chairman Martin Robinson, former CDG CFO Tim Doubleday and ex-Nando’s man Richard Denning-Smith. They secured the master franchise agreement for Burger King UK and acquired Caspian, one of the UK’s largest Burger King franchisees with 70 restaurants, in simultaneous deals last year.
Having now had a few months time to get his feet under the table, Mr Murdoch said the company is firmly geared up to expanding the business in the UK.
“We think there is a very significant opportunity with Burger King; I suppose we’d liken it a little bit to having a start-up with a global brand – there was literally no-one in the organisation and it has been great fun in the sense of pulling a whole team together from different backgrounds,” he said during a keynote session at the Commercial Kitchen show in Birmingham this afternoon.
“Ultimately, despite perhaps a series of missteps that the organisation has taken over the last five, six, seven, eight years – and that is no disrespect to the franchisees at all – and despite some big issues we have had, the restaurants take quite a bit of money, they are still profitable and there is a significant opportunity out there. There are 500 Burger Kings and 1,700 McDonald’s out there; each McDonald’s does significantly more volume than Burger King, so there is some very obvious opportunity without just necessarily chasing McDonald’s. You can see the size of the market and we think the market is pretty open.”
Mr Murdoch suggested the growth potential of the business had suffered from successive years of ownership changes in the UK, which led to a lack of consistency.
“Every time Burger King was poised to go another sort of growth cycle, they’d perhaps change the management again, and I think for the most recent part there has perhaps been a lack of reinvestment into the brand itself. If you go into a lot of our restaurants they are perhaps more tired than we would want – not all of them – so I think there is some fairly obvious opportunities around those sort of areas.”
Mr Murdoch acknowledged that Burger King has had a “history of closing restaurants, not opening them” but he said the current management teams intends to “reverse” that process.
“A lot of time is being spent on finding the right pipeline. I think one of the opportunities that we are benefitting from is that the slowdown in the market that other people are struggling with means that landlords are much more realistic about rent, and secondly there are many more sites available. We are not finding it difficult, at all, to find opportunities. Those opportunities might be two years away but we see a lot of opportunities from a real estate point of view in a way that people perhaps weren’t seeing a year ago.”
Mr Murdoch said the company is making a “big investment” to grow its estate, with between 20 and 25 openings planned in 2018 and between 30 and a 50 a year over the next couple of years.